The balance sheet shows the financial position of your company on a specific date. Balance sheets are usually dated at the end of the month, such as September 30, 2009.
The balance sheet is composed of three sections:
- Assets – include current assets (cash or other assets that will be converted into cash in a year or less), long-term assets (assets that will be held for a year or more), and property, plant, and equipment (durable assets used in the operations of the business).
- Liabilities – include current liabilities (obligations that will be paid with assets in a year or less) and long-term liabilities (obligations that will take longer than a year to repay).
- Owners Equity - includes capital stock (the cash and assets you contributed to start your business) and retained earnings (profit that has not been distributed to the owners).
Over the next few days, I will explain in more detail the three sections of the balance sheet.
You really make it sound so simple. But that's really how it should be kept. KISS - Keep It Simple Silly!
Posted by: CPA Courses Online | October 19, 2009 at 09:04 AM
Accurately stated. I am amazed when I find CEO's who have no idea where they are on a daily basis.
Posted by: Cash Flow Help | October 26, 2009 at 02:48 PM